Community Reinvestment Act (CRA) Examinations
The Community Reinvestment Act (CRA) is a federal law that was enacted in 1977 to encourage banks to meet the credit needs of the communities they serve, including low- and moderate-income (LMI) neighborhoods. By addressing gaps in lending, the CRA promotes access to credit, homeownership, and economic opportunity.
CRA Review Process
Examiners conduct a separate review under the Community Reinvestment Act (CRA) to determine how well a bank is meeting the credit needs of its entire community without compromising the safety and soundness of the bank's operations.
The regulators evaluate a bank’s performance in its assessment areas. Assessment areas are geographic areas defined by the bank where the bank maintains deposit-taking facilities, such as branches or ATMs. CRA evaluations focus on how well banks serve their assessment areas, particularly LMI neighborhoods within their assessment areas.
In evaluating a bank’s CRA performance, the agencies consider three main criteria: (1) the bank’s lending to LMI individuals, businesses, and geographies; (2) the bank’s investment in community development projects; and (3) the banking services (including branch locations and online banking) and community development services offered by the bank. The number of criteria vary by bank size, for example, with smaller banks evaluated just on retail lending.
Public involvement is also a key component of the CRA. Community organizations and individuals are encouraged to provide input to the agencies during the CRA evaluation process, which informs the evaluations, and allows communities to help shape their financial future.
At the conclusion of a CRA evaluation, banks receive one of four ratings: Outstanding, Satisfactory, Needs to Improve, or Substantial Noncompliance. These ratings are made public, ensuring transparency and encouraging banks to prioritize community needs. Banks’ CRA performance is considered when the agencies analyze certain bank applications, including applications for mergers, acquisitions, and branch openings.
Every bank’s CRA performance is evaluated periodically by its primary federal regulator: the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, or the Office of the Comptroller of the Currency.